U.S. home prices rose modestly in June, pushed up by strong sales and a limited supply of available properties.
The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index, released Tuesday, increased 5.1 percent in June compared with a year ago. That’s down from a 5.3 percent annual gain in May and is the slowest year-over-year pace since last August.
Home values are still soaring in the Northwest, but have slowed to more sustainable rates elsewhere. In Northeastern cities such as New York and Washington, D.C., they are rising at roughly the rate of inflation, and in Boston, less than 5 percent.
Still, nationwide prices are increasing more quickly than incomes as buyers compete for the dwindling supply of available homes. That reflects an ongoing imbalance in the housing market that could stifle sales in the coming months.
“June represents the fifth straight month of flat or decreasing year-over-year price gains, but homebuyers are still being challenged as prices outpace income growth,” Ralph McLaughlin, chief economist at real estate data provider Trulia, said.
Home prices in the Northwest continued to climb at a double-digit pace. They rose 12.6 percent in Portland, 11 percent in Seattle, and 9.2 percent in Denver. Those three cities have topped the list of price gains for the past five months.
Yet those cities are increasingly outliers. Price gains in the Midwest were mixed. Home prices in Cleveland and Chicago rose just 2.5 percent and 3.3 percent, respectively, while in Minneapolis they climbed a faster 5.1 percent.
Southern cities saw stronger price gains. They rose 8.9 percent in Dallas, 7.9 percent in Tampa, and 5.8 percent in Atlanta.
The 20-city price index plunged after the housing bubble started to burst in 2006, plummeting by more than a third before prices began to rise again in March 2012. In June, they were still 8.1 percent below their peak level.
That suggests there are still many homeowners who bought near the peak and have little equity in their homes. Or they remain underwater, owing more on their mortgages than their homes are worth. In either case it is difficult for them to sell.
The number of homes for sale has fallen 5.8 percent from a year ago, leaving would-be buyers with fewer choices, according to the National Association of Realtors.
That may have hobbled sales in July. Purchases of existing homes fell 3.2 percent that month to a seasonally adjusted annual rate of 5.39 million. Still, that decline came after sales reached their highest level in more than nine years in June.
Low mortgage rates are pushing in the other direction by making home purchases more affordable. The average rate on a 30-year fixed mortgage was 3.43 percent last week, according to mortgage giant Freddie Mac, not far from its record low.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The June figures are the latest available.